Dominick Gabriele, an Oppenheimer analyst, initiated coverage of Block (NYSE:), with an Outperform rating. He also set a target price for Block at $150.00.

After recent shares falls, the analyst thinks that Street consensus for 2023 is low.

“E-com player focused in integrated payments moving upstream with large runway. Even though Cash App has been scaled up in the US, it is open to international cross-selling and expansion. Adjusted EBITDA ex. Depreciation close to consensus due to $2.3B 2022FY OPEX guidance, and Afterpay losses higher than Street probable modeling. EBITDA 2023FYE might have upside given the management’s flexibility and higher revenue outlook. Crypto a gateway to Cash App likened to P2P vs. actual revenue driver,” Gabriele wrote in a note.

The analyst notes that Block’s “gross profit multiple is absolutely tied to PYPL’s valuation.” This thesis helps him come up with a $150.00 per share price target.

“SQ’s traded between ~1.0–1.5x PYPL’s multiple since 2016, why stop now? Given our expectation for , we believe SQ could revert to 11.82x.”

Additionally, the analyst stated that consensus earnings per share (EPS) will fall following 1Q22 earnings.

The price of blocks stock is currently down 0.3% on Wednesday, pre-open.

By Senad Karaahmetovic